Banks under fire will disclose level of sub-prime loss

Britain's banks will this week come under further pressure to reveal the extent of losses from the global credit crunch after speculation mounted over the weekend that HSBC could be forced to write down the value of mortgages at its US arm by a further $1bn (£500m).

HSBC Finance will report third quarter results this week and the group, until recently known as Household, is expected to include a re-valuation of its mortgage portfolio.

HSBC, already under attack from an activist investor, could see pressure on chairman Stephen Green to step down.

Barclays came under sustained assault last week following a series of critical reports suggesting it could be hiding large and damaging debts on its balance sheet. At one point on Friday, trading in its shares was suspended following a 9% fall in the bank's value.

Barclays denied it was harbouring undisclosed debts. It is understood to be preparing detailed statements with its auditor, PWC, of outstanding positions on the wholesale money markets in time for its pre-close statement at the end of the month. Most of the positions under scrutiny are held by its Barclays Capital arm. The arm's boss, Bob Diamond, released details in September of holdings he said could realise losses of up to £70m. Fears that losses could be 100 times this amount have pushed down the value of the bank by 35% over the last year.

Royal Bank of Scotland has suffered even harsher punishment with a 39% cut in its value. Brokers blamed a refusal by its boss Fred Goodwin to comment on the bank's potential losses from sub-prime related debts. One broker said the bank's purchase last month of the wholesale banking operations of Dutch rival ABN Amro "made a bad situation worse".

HSBC's charge for bad debts was $6.35bn in the first half of the year, as it continued to suffer defaults on loans, many of them sold by arms length mortgage brokers.

Prompt disclosure of losses has so far kept shareholders onside. However, further losses, combined with criticism of the bank's direction from activist investor Knight Vinke, could provoke a turnaround in sentiment. The fund manager wants the bank to strengthen its management team and focus its efforts on building businesses away from mature economies in North America and Europe.